WASHINGTON - Kalamazoo, Mich.-based Stryker Corporation and its former
outpatient therapy division, Physiotherapy Associates Inc., have agreed to pay
the United States $16.6 million to settle allegations that Physiotherapy
submitted false claims to Medicare and other federal health care programs, the
Justice Department announced today.

The settlement resolves allegations that Physiotherapy, which is based in
Memphis, Tenn., submitted claims for services to Medicare, state Medicaid
programs, and the Department of Defense’s TRICARE program that were falsely
billed as one-on-one services and that Physiotherapy improperly retained excess
or duplicate payments it received from federal health care programs. Under the
terms of the settlement, Physiotherapy agreed also to enter into a corporate
integrity agreement with the Office of Inspector General for the Department of
Health and Human Services.

“Submitting false claims to our nation’s health care programs is tantamount to
stealing from the American taxpayer,” said Peter D. Keisler, Assistant Attorney
General for the Civil Division. “Today’s settlement sends a strong signal that
the government aggressively pursues those who engage in such conduct and makes
them pay a steep price for their misdeeds.”

The settlement resulted from two qui tams, or whistleblower suits, filed by
private citizens against Stryker and Physiotherapy. Both of the whistleblowers,
Kerry Deering and Wendy Whitcomb, were employees of Physiotherapy. As a result
of today’s settlement, the two will receive nearly $3 million. Under the
whistleblower provisions of the False Claims Act, private parties can file an
action on behalf of the United States and receive a portion of the proceeds of a
settlement or judgment awarded against a defendant.

“This settlement is a reflection of our office’s commitment to protecting the
integrity of the Medicare system,” said Michael J. Sullivan, U.S. Attorney for
the District of Massachusetts. “The conduct in this case, which included
billing for services not covered, and retaining overpayments from federal
healthcare programs, is unacceptable.”

“This case underscores the commitment of this office to vigorously investigate
and prosecute qui tam suits, said David F. Kustoff, U.S. Attorney for the
Western District of Tennessee. “The amount paid to settle this litigation should
serve as a deterrent to other health care providers who seek to defraud federal
health care programs.”

The resolution of these two cases was achieved by the Justice Department’s
Civil Division, Commercial Litigation Branch, and the U.S. Attorney’s Offices
for the District of Massachusetts and the Western District of Tennessee.